Term Vs Whole Life Insurance

A Term Life Insurance covers only life that is on the death of the insured the face value of the policy to the named beneficiary. A Term Insurance can be bought for periods ranging from one year to thirty years.

On the other hand Whole Life Insurance is a combination of a Term Policy and an investment attribute. The investment attribute can be shares, bonds or money market instruments. This Life Insurance plan accumulates cash value so that when required money can be borrowed against it as loan for which this is known as cash value life insurance. There are three kinds of Whole Life Insurance policies like Permanent Life Insurance Policy, Universal Life Insurance Policy and Variable Life Insurance Policy. The major difference between the policies is the control that the policy holder has over the way the policy funds should be invested by the insurer.The amount for which the Whole Life Insurance is taken is called as death benefit that will be given to nominated beneficiaries at the time of death of the insured guaranteed. Basically Whole Life Insurance Policies are expensive than the Term Life Insurance Policy as the person is not only paying for the Insurance but also for the investment done.

On the other hand the Term Insurance Policy is less expensive than Whole Life Insurance but cannot be guaranteed for Life as it is taken for short terms. As the term of the policy is over the beneficiaries do not have a claim over the death benefit. One more point to add for the Term Life Insurance is that the cost depends on the age, the health of the insured, the term of the policy and the amount of benefit involved.

Life Insurance in India also deals with both kinds of policies given out by various insurance companies that is possible to be compared on www.policybazaar.com .Thus to sum up the differences between the two types of Life Insurance Plans are laid out as follows:

Term Insurance Policy
1. It is not very expensive but time bound
2. Once the term expires the policy expires without benefiting the beneficiary if the insurer is alive.
3. It is a simple insurance product.
4. It is limited to a term like 5 years,10 years, 30 years etc.

Whole Life Insurance Policy
1. It is very expensive but covers whole life or till the insurer is 100 years old.
2. Once the period of 100 years or the death before that happens the face value of the insured is guaranteed.
3. It is a combination of insurance and other investment.
4. It is spread out till 100 years or till the death of the person, whichever is early.